Correlation Between NYSE Composite and Westamerica Bancorporation
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Westamerica Bancorporation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NYSE Composite and Westamerica Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Westamerica Bancorporation, you can compare the effects of market volatilities on NYSE Composite and Westamerica Bancorporation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NYSE Composite with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Westamerica Bancorporation.
Diversification Opportunities for NYSE Composite and Westamerica Bancorporation
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Westamerica is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation and NYSE Composite is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NYSE Composite are associated (or correlated) with Westamerica Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westamerica Bancorporation has no effect on the direction of NYSE Composite i.e., NYSE Composite and Westamerica Bancorporation go up and down completely randomly.
Pair Corralation between NYSE Composite and Westamerica Bancorporation
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.4 times more return on investment than Westamerica Bancorporation. However, NYSE Composite is 2.5 times less risky than Westamerica Bancorporation. It trades about 0.08 of its potential returns per unit of risk. Westamerica Bancorporation is currently generating about 0.01 per unit of risk. If you would invest 1,547,479 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 464,866 from holding NYSE Composite or generate 30.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Westamerica Bancorp.
Performance |
| Timeline |
NYSE Composite and Westamerica Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Westamerica Bancorporation
Pair trading matchups for Westamerica Bancorporation
Pair Trading with NYSE Composite and Westamerica Bancorporation
The main advantage of trading using opposite NYSE Composite and Westamerica Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Westamerica Bancorporation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Westamerica Bancorporation will offset losses from the drop in Westamerica Bancorporation's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Westamerica Bancorporation vs. Heritage Commerce Corp | Westamerica Bancorporation vs. Heritage Financial | Westamerica Bancorporation vs. Penns Woods Bancorp | Westamerica Bancorporation vs. 1st Source |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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